The World's Largest Heart Factory
wenty-day-old Samuel Idoko’s parents were worried sick. The boy’s heart condition needed urgent surgery but back home in Nigeria, there were no hospitals dealing with such cases. They didn’t even have the time to celebrate his birth as they rushed him to Bangalore. Their destination: Narayana Hrudyalaya Institute of Cardiac Sciences.
Established in 2001, this 1,000-bed hospital and its sister concern, Rabindranath Tagore Institute of Cardiac Sciences in Kolkata, together do 15 percent of all heart surgeries in India. At the rate of 30 cardiac surgeries a day, the Bangalore facility handles the highest number of heart surgeries in the world.
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Image: Gireesh G V
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WHY BIG IS BETTER: Devi Shetty's team accounts for 15 percent of all heart surgeries in India | |
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It’s not for nothing that patients come here in droves. It has an impossible-sounding success rate of 95 percent and charges a fraction of what other heart hospitals do. The charismatic Dr. Devi Shetty, the hospital’s founder, has been relentlessly pursuing a mission: To make world-class healthcare affordable to the masses. “Hundred years after the first heart surgery was done, only 8 percent of the world’s population can afford it,” he says, quickly pointing out that this is a five-year-old statistic and today we might be worse off. “What happens to the rest?” asks Shetty.
Filling the Gap
Shetty’s hospital has managed to dissociate healthcare from affluence. The patient is told beforehand what he will pay. This is fixed irrespective of any future complications or the duration of stay.
A heart surgery here costs Rs. 110,000, much less than what it costs elsewhere. Even so, you pay the full price only if you can afford it. Many don’t pay at all. In 2008, out of 6,088 heart surgeries at the Bangalore centre, only 1,232 were fully paid for. Yet, the hospital makes a tidy profit. The Narayana Hrudyalaya group had a turnover of close to Rs. 300 crore in 2008-09, up from Rs. 150 crore in the previous year.
Narayana Hrudayalaya is now moving to have the largest number of beds in the country, beating Apollo Hospitals which has 6,000. It is creating multi-specialty “Health Cities”. The Bangalore facility will be ramped up to 5,000 beds. In addition to the 1,000-bed heart hospital, it has new cancer, orthopedic and eye hospitals. In the next two years, it will add two more, one for women and children and another for tropical diseases. The Kolkata facility will also be expanded to 5,000 beds. The idea is to have a health city in every state of India and have a presence in every emerging economy of the world. Already work is on to set up facilities in Malaysia and Mexico. “Next year our turnover should be Rs. 600 crore and after Phase 1 of the Health Cities plan is complete in 2010, we should be closer to Rs. 1,000 crore,” says Sreenath Reddy, chief financial officer.
All this will be done without increasing the costs of the business. Before Devi Shetty, it was considered impossible to drive down costs to such levels; even now, no one has been able to replicate this. Top-flight management researchers want to understand how Shetty does it. “The mortality rate in Narayana Hrudyalaya is much lower than in New York State for similar kinds of heart disease,” says University of Michigan’s C.K. Prahalad. The hospital has been discussed extensively in his 2004 bestseller, The Fortune at the Bottom of the Pyramid. It has also become a case study at Harvard Business School. Adds Kokila P. Doshi, professor of Economics at University of San Diego’s business school, “Till now the trend was that government serves the poor. Shetty has shown that private enterprise can serve the poor profitably.”
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